According to agency theory, conflicts such as the principal-agent problem are considered Blank______ issues.Multiple choice question.morallegalethicalsocial

Break Down the Problem

1. Identify the key concepts related to agency theory and the principal-agent problem.
2. Analyze what type of conflict this problem represents.

Relevant Concepts

• Agency Theory: This theory explains the relationship between principals (those who delegate authority, such as shareholders) and agents (those who perform tasks on behalf of principals, such as company executives).
• Principal-Agent Problem: This problem arises when there is a conflict of interest between the principal and the agent, where the agent may not act in the best interest of the principal.

Analysis and Detail

1. Moral Issues: This refers to conflicts based on ethical behavior and responsibilities between the agent and the principal.
2. Legal Issues: These involve the adherence to laws and regulations but do not directly cover conflicts of interest.
3. Ethical Issues: This aligns more closely with the principles of agency theory, focusing on the ethical responsibilities of the agent towards the principal.
4. Social Issues: These generally relate to societal behavior and customs rather than specific contractual or relational conflicts.

Verify and Summarize

Given that the principal-agent problem involves conflicts of interest and ethical considerations, the issue that best describes this conflict within agency theory is ethical.

Final Answer

ethical